Bengal finance minister Amit Mitra has written a letter to Union finance minister Nirmala Sitharaman on relaxing the limits under Fiscal Responsibility and Budget Management Act (FRBM), release of tax devolution and increase in spending from the State Disaster Relief Fund.
In his letter, Mitra has urged her to relax the FRBM limits by at least 2 per cent in 2021-22 so that states can use the full headroom for borrowing granted by the Centre. The Modi government had raised the borrowing limit for states by 5 per cent as part of its Atma Nirbhar Bharat package of measures.
Borrowings up to 4 per cent were freely allowed but an additional 1 per cent came with reform-driven conditions, which Mitra says limits the fiscal space of states. Mitra said in his letter that the states have been allowed to dip into the State Disaster Relief Fund up to 50 per cent to meet Covid-related expenses but the corpus is just Rs 1,100 crore. “The state would need Rs 11,387 crore to tackle Covid-19 for 2020-21,” the letter said.
Mitra said Bengal has spent Rs 4,000 crore to combat Covid-19 but has received only Rs 279 crore in grants from the Centre.
Release of pending allotments under centrally sponsored schemes was also in the letter. The estimated amount is Rs 32,494.67 crore under various schemes. Mitra has also called for re-evaluation of the ongoing central schemes and making sufficient allocation for maintenance as well as for costs towards manpower.
Mitra also noted that the Centre must borrow the remaining Rs 72,000 crore to meet the shortfall in GST compensation cess collection and lend it on to the states. Out of the Rs 1.82 lakh crore estimated GST compensation gap, the Centre is borrowing Rs 1.10 lakh crore through an RBI special window, Mitra pointed out.
Bengal had also asked for relief worth Rs 35,000 crore for cyclone Amphan, of which only Rs 2,250 crore has been given. “The balance amount must be provided to the state expeditiously,” Mitra said.
He further said that the Centre must end the shortfall in tax devolution. The state has received only Rs 27,943.70 crore against dues of Rs 37,904.50 crore till December end, Mitra said in the letter.
The letter is in the wake of a pre-budget consultative meeting with the state finance ministers.
